Getting out of Debt in March 2013 - Mothering Forums

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Old 03-04-2013, 06:06 AM - Thread Starter
 
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Do you want to get out of debt? Start living on a budget? Be able to start saving? Then this is the thread for you! Some of us use Dave Ramsey's method but please join us even if you're following someone else/your own plan. All are welcome!

 

Here's DR's plan:

Pre-Step 1: Get current on your debts and do a budget
0.1 No new borrowing.
0.2 Talk with spouse and get him/her on the same page as you concerning finances.
0.3 Do a written budget
0.4 Temporarily stop all retirement contributions
0.5 Get current on all the basics (Shelter, Food, Utilities, Basic clothing)
0.6 Amputate "toys" (bikes, boats, ATV's etc) to help snowball
0.7 Cut lifestyle (Cut cable, cell, extras, eating out) and/or get a second job to raise $1000 EF.
0.8 Get current on ALL bills

BS1 $1,000 to start an Emergency Fund
1.1 Chop up/freeze CC's (You have an EF now)
1.2 Get Health insurance NOW if in the US
1.3 Get Life insurance NOW if you have considerable debt/your family couldn't make it financially if you died.
1.4 Amputate cars that you can't pay off within 24 months

BS2 Pay off all debt using the Debt Snowball
2.0 Do the debt snowball, paying all your debts from lowest BALANCE to highest.

BS3 Three to six months of expenses in savings
3.1 Start car replacement fund
3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI.
3.3 Start furniture or other non-essential stuff replacement fund

BS4 Invest 15 percent of household income for retirement

BS5 College funding for children

BS6 Pay off home early

BS7 Build wealth and give! Invest in mutual funds and real estate

Here's the link to Dave Ramsey's website: http://www.daveramsey.com or if you want a good DR discussion forum,http://www.llnoe.com is good but hardcore. Gail vax Oxlade's Til Debt do Us Part is great tv show, very motivating. Her website is:http://gailvazoxlade.com/blog Others like Suze Orman or Mary Hunt, really doesn't matter whose method you use, just start the process to getting out of debt


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Old 03-04-2013, 06:50 AM
 
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Happy March! One month closer to goals, hopefully! :) 

 

Things completed from my to-do list last month: 

- pay three parking tickets redface.gif

- add renters insurance (which led us to switching our car insurance and getting our rate cut in HALF! biggrinbounce.gif)

 

In addition, we now have an entire months living expenses in our checking account so I can stay on top of bills, and not deal with late fees, overdraft, rushing to the bank, quick juggling things around, etc. (which happens because I get paid randomly and my husband's check fluctuates so dramatically from paycheck to paycheck - really made it hard to stick to any kind of budget!) As we get paid each month, that income will now go towards the following months expenses. 

 

Still left on my to-do list:

- gather some medical bills (about $500 or so) and make payments

 

So that brings us to:

BS3 Three to six months of expenses in savings  
3.1 Start car replacement fund
3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI.
3.3 Start furniture or other non-essential stuff replacement fund

We are doing this part backwards. We are planning to buy a new to us van at the end of the month, and I am looking for a couch, area rugs and curtains (that I already have the money set aside for). Then I will start saving the 3-6 months living expenses; I estimate we should have that by July. THEN we will put away everything for a down payment on our house.  

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Old 03-04-2013, 08:27 AM
 
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Subbing


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Old 03-05-2013, 07:20 AM
 
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Hello March! So happy to see you!

Pre-Step 1: Get current on your debts and do a budget

0.1 No new borrowing. Not until we are able to buy a home

0.2 Talk with spouse and get him/her on the same page as you concerning finances. Yes, but we still keep our money seperate

0.3 Do a written budget done, but because my income I so variable week to week, it doesn't always work

0.4 Temporarily stop all retirement contributions. DP has Roth

.5 Get current on all the basics (Shelter, Food, Utilities, Basic clothing). Done, except I "owe" DO rent for March still, but I have 500 of the 675 sitting in a drawer upstairs
.6 Amputate "toys" (bikes, boats, ATV's etc) to help snowball
No toys, no vacation s etc

0.7 Cut lifestyle (Cut cable, cell, extras, eating out) and/or get a second job to raise $1000 EF.
Getting new tv with tax return for WiFi access, so w can ditch the cable and cu our bill by 100 bucks a month
0.8 Get current on ALL bills
Done

BS1 $1,000 to start an Emergency Fund. about 350 buck left to go

1.1 Chop up/freeze CC's (You have an EF now) none. Going to get a secured card to help build credit for mortgage

1.2 Get Health insurance NOW if in the US done

1.3 Get Life insurance NOW if you have considerable debt/your family couldn't make it financially if you died. Soon

1.4 Amputate cars that you can't pay off within 24 months
Both cars paid off

BS2 Pay off all debt using the Debt Snowball

2.0 Do the debt snowball, paying all your debts from lowest BALANCE to highest.
No debt

BS3 Three to six months of expenses in savings. Before or after down pymt for home?

3.1 Start car replacement fund. Soon.

3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI. Can't wait!

3.3 Start furniture or other non-essential stuff replacement fund. Soon


BS4 Invest 15 percent of household income for retirement. Can't wait!


BS5 College funding for children


BS6 Pay off home early. Can't wait!


BS7 Build wealth and give! Invest in mutual funds and real estate
Can't wait!
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Old 03-06-2013, 11:15 AM
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Lets see...
I'm on pre-step 1. I have one bill that I need to get current on. That will take a while.

In February, I ended up with $46 in my emergency fund. My goal is $500.

This month, I'm doing my taxes. I'm an independent contractor so I'll see if I end up getting anything. I was told I wouldn't even get the child tax credit last year. I'm hoping she just did it wrong. With that, I'm getting this EF funded, paying on that bill and doing other small things. I'm really hoping here.

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Old 03-06-2013, 10:53 PM
 
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vegan can you explain how the wifi tv works? I would like to not get cable when we buy the house.

 

So the guy who manages the place we are staying at finally told us yesterday, after being here for a year, that they have free wifi for folks to use while they stay here. I have been paying $50 a month for 5mb that I couldn't even stream video with. So now I'm not only saving $50 per month but now we have tv too!!! I'm a little annoyed that we've been here a year and he just told us now. I could have saved over $600 plus had TV to watch all these months


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Old 03-07-2013, 09:53 AM
 
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I've been reading this thread from MMM  I really want to start making some drastic changes.  I am going to change to a $10 cell phone plan this month for sure.  The linked thread is long & complex but it's author is great at replying to questions!  HTH!


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Old 03-07-2013, 09:56 AM
 
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Has anyone read Your money or your life? I have not, but I have heard it can get you into a good frame of mind for a strong financial future.

Off to check out that MMM link!


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Old 03-08-2013, 11:53 AM
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SunRise, the book is at my library. I'm taking my son later so I'll look at it.
Checking out that link too. Thanks!

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Old 03-09-2013, 01:10 PM - Thread Starter
 
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Ooo, that reminds me - I own that book, I should re-read it.

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Old 03-09-2013, 09:33 PM
 
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Wow, this was what my DH and I were talking about - communications expenses. The only people generally talk to on the phone are his parents, they are in Canada and we are in the U.S. We pay big bucks to receive Canadian calls on our cell phones, so it makes sense to have a land line so they can call us but I think the most basic landline with be fine. Then there is internet access and wireless phones.  I really like the idea of Page Plus which looks like a verizon network coverage, but its "dealers" are all the little convenience stores around town. Something has to go and the wireless fees are ridiculous and seem to keep going up.


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Old 03-10-2013, 12:20 PM
 
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Chocked off part of a goal for this month- reduced our home phone cost by half by converting to ATT Uverse. Now onto reducing cell phone fees. The Mr. Money Mustache articles are great, although they have profanity every now and then.


Crafty Geeky lady (37, hypothyroid) married 7/2010 love of my life (42, azoospermia). I believe in MIRACLES! Twin boys born 12/21/13 at 40 weeks 2 days! 3/52 crafts in 2014 Ramsey's BS1: Done! 2/17/12 BS 2 goal: 6/7/17 no sperm initial DX 3/23/12 BFP 4/7/13!
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Old 03-10-2013, 07:45 PM
 
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Originally Posted by SunRise View Post

Has anyone read Your money or your life? I have not, but I have heard it can get you into a good frame of mind for a strong financial future.

Off to check out that MMM link!


I have. I thought it was great. The financials didn't apply to me, but shaping my frame of mind - Brilliant. Basically it makes you aware that for every hour you are at work, that's another hour of your life that you're not going to get back. You are essentially trading your life for money, so use that money well. We know this already but we don't focus on it often enough. It helps you to define and prioritize.


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Old 03-11-2013, 04:58 AM
 
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I have. I thought it was great. The financials didn't apply to me, but shaping my frame of mind - Brilliant. Basically it makes you aware that for every hour you are at work, that's another hour of your life that you're not going to get back. You are essentially trading your life for money, so use that money well. We know this already but we don't focus on it often enough. It helps you to define and prioritize.

 

Thanks for the summary! My priorities definitely evolve each year, which helps a lot with finances.


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Old 03-11-2013, 06:05 AM
 
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Trekkingirl, I haven't applied my WiFi tv yet, but according to my research, if you have WiFi in your home, you can use an Xbox or a WiFi compatible DVD player (80ish bucks on Amazon) you connect it to your tv with hdmi cord, and you have access to your hulu,Netflix or Amazon prime accounts. So right now we pay about 160 monthly for cable/landline phone/internet, it should end up being around 60 bucks for internet, I already have prime, and another 9 bucks for hulu. We will drop the phone as we all have cheapo cell phones anyway. I hope that makes some kind of sense smile.gif
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Old 03-11-2013, 09:54 PM
 
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oh yeah, I think my blu ray has some type of option for that


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Old 03-12-2013, 05:05 AM
 
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DH is coming around to the idea of a pay as you go wireless plan. He doesn't like the idea that he has to enter a pin every month to get access.  I want to be able to keep our devices from Verizon and we can do that through Page Plus but mine requires a tweek to down grade from 4G to 3G.  Yeah, I am good with that.  Now to get DH completely onboard about having no contract for wireless!


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Old 03-12-2013, 11:20 AM
 
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I'm new to this thread.  I've been trying very hard over the past few years to get out of debt.  I finally filed for BK in April 2012, discharged in July 2012.  Was on the verge of defaulting on my mortgage during this time (Bank of America refused payments while the BK process was happening because I was 30 days past due when they got the BK notice).  Managed to scrape together $13,000 within 5 months to become current with my mortgage (almost $4k of that was fees).  I fell behind with bills in late 2011/ early 2012 because my job was reduced from 100% fte to 80% fte (due to budget cuts within the school district), AND being separated from my husband, I remained in the home and tried my best to pay the mortgage and household expenses on my own.  I was able to do it (but barely) on 100% fte salary, but not at 80%.  My fte has been increased to 90% and I did get a small raise for completing a class, and my husband and I have reconciled so we now have his income too.  Now, my only debt is the mortgage and federal student loan.  

 

HOWEVER, during the time that I was scrapping to save my home, I stopped paying my private student loan (I continued to pay on my federal).  Now Chase private student loans is harassing me and threatening me, calling me night and day threatening to sue me, telling me that I'm irresponsible.  They offered me an "settlement option" to pay a reduced amount on the loan ($10k instead of $17k) but they need the money NOW and are trying to persuade me to "borrow from friends and family" or "take out a loan" (both of which are not realistic options).  I explained that now that I'm current on mortgage, that I DO have the money to work on paying them, but they refuse to work with me.  I even offered $400 a month and they refuse.  Now I'm not sure what will happen.  I have a friend who was in the same position a few years ago and she said that because it is a private SL and not federal, that it is much harder to sue and garnish wages.  I worry about this because daycare is going to cost us $1k a month (starting in September) and if my wages are garnished, I won't be able to pay for daycare.  

 

Anyway, here is my info:

 

Pre-Step 1: Get current on your debts and do a budget
0.1 No new borrowing.  --> Done-  I have no access to credit and DH cut up his only credit card
0.2 Talk with spouse and get him/her on the same page as you concerning finances. -->Done
0.3 Do a written budget --> In process
0.4 Temporarily stop all retirement contributions -->We both have pensions through the state and our contributions are NOT optional.  We both stopped our additional IRAs
0.5 Get current on all the basics (Shelter, Food, Utilities, Basic clothing)  --> Almost there.  Still owe $269 on water bill and $350 on electric/ gas.  Mortgage and insurance current.
0.6 Amputate "toys" (bikes, boats, ATV's etc) to help snowball --> No toys to sell
0.7 Cut lifestyle (Cut cable, cell, extras, eating out) and/or get a second job to raise $1000 EF. --> (Trying to work with DH to stop cable- isn't going to be easy.  In a contract for cell phone until 8/13-  will be charged $250 early termination fee for each line if cancel prior to contract end.  Eating out is a work in process since we've established a date night (it's part of our reconcilliation process), but we can alter choices and set a budget.  As of today, we have $400 in EF irked.gif
0.8 Get current on ALL bills -->Still owe $269 on water bill and $350 on electric/ gas.  (See above for private student loan issue).

BS1 $1,000 to start an Emergency Fund
1.1 Chop up/freeze CC's (You have an EF now) --> Done- no access to credit anyway
1.2 Get Health insurance NOW if in the US --> Done- provided by employer
1.3 Get Life insurance NOW if you have considerable debt/your family couldn't make it financially if you died. --> Done- provided by employer and small amount of supplemental
1.4 Amputate cars that you can't pay off within 24 months --> both cars paid off

BS2 Pay off all debt using the Debt Snowball
2.0 Do the debt snowball, paying all your debts from lowest BALANCE to highest.

BS3 Three to six months of expenses in savings
3.1 Start car replacement fund --> I wish
3.2 Save up 20% for home purchase OR pay down existing mortgage to the point you can drop PMI.  --> Already own home and no PMI because it was an 80/20 loan (however, we could work on paying off the HELOC).
3.3 Start furniture or other non-essential stuff replacement fund

BS4 Invest 15 percent of household income for retirement --> DH and I have pensions, but we would like to continue to add to IRA once in a better position financially

BS5 College funding for children --> this might have to wait until after daycare expenses are done

BS6 Pay off home early

BS7 Build wealth and give! Invest in mutual funds and real estate


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Old 03-12-2013, 11:21 AM
 
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Yes, but we still keep our money seperate

 

DH and I keep money separate as well, which has it's pros/ cons.  I'm told that it will be harder.  We'll see how it goes.


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Old 03-12-2013, 11:24 AM
 
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I was told I wouldn't even get the child tax credit last year.

 

How is this possible?  I don't know much about how this works, if it is based on income, etc?


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Old 03-12-2013, 07:54 PM
 
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JNajla, offer to pay whatyou can afford. If they say "no", ask them if they are denying acceptance of your repayment. If they deny acceptance of the payment, record it (digital recording) and keep the recording. Tell them that by denying your payment, you will consider the debt cancelled. This is a technically legal loophole that often puts them in a frame of mind to work with you. The other method is to just pay what you can and ignore them. So long as you are paying a reasonable amount, they shouldn't be able (or willing) to sue/garnish. Just don't look for this to do your credit score any tabors.

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Old 03-12-2013, 08:10 PM
 
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Thank you so much Wolfcat, I was hoping to get advice like that. I've been reading about the Fair Debt Collections Practices Act and have been reading horror stories about deceptive collection attempts by private student loan companies now that the bubble has burst. I've even called a few attorneys who've said they don't touch cases with private student loans or they don't return my calls. I found it odd that Chase is threatening to sue me, but yet they cashed my $200 check.

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Old 03-12-2013, 08:19 PM - Thread Starter
 
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Today I paid off my two smallest debts on my debt snowball - $3 I owed to my DS and $7 I owed in library fines. THIS I find motivating.

I can't wait until I have $1,000 in my baby EF to start doing this - sorry DR. I am going to keep going with the debts while I build the EF - which right now is at $47.60.

 

Got some disappointing news. My son applied to private high schools and got accepted by one of them but he did not receive any financial aid (scholarships). We do not want more debt. We have an appt on Thursday to talk with the financial people at the school about a payment plan. I am considering applying for a job at the school so that he could get a tuition waiver - but I don't even know if they have any openings that I am qualified for.  It's worth a try though I think.


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Old 03-13-2013, 04:29 AM
 
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orangemomma - congrats on paying off 2 debts and it looks like your EF is climbing in value a little at a time. Goodluck on the private high school.  Tuition can be very tough at places like that. I work at one currently and I know how much some of the parents sacrifice to have their children there. Can you son work to make up some of the cost? I know I valued my private education more because I worked to contribute to its payment.

 

AFM, DH and I would really like to refinance our house but I had gotten a home improvement loan that has the house as

collateral plus I did an 80/20 loan with 80% conventional mortgage, 20% HELOC. The new company won't let me refinance because there are 3 mortgages on the house and they are confused how I got a third since they said companies aren't supposed to do that.  Anyway, the third mortgage is $1807.44 and I want to focus on paying that off so we only have 2 mortgages and can hopefully refinance the house.


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Old 03-13-2013, 05:15 AM
 
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trekkinggirl: How is the short sale going?

 

welcome Jnajla!

 

Quote:

Originally Posted by JNajla View Post

 

How is this possible?  I don't know much about how this works, if it is based on income, etc?

 

It is income based. Im not getting the full amount for my two children, but I do get some.

"Limitations - The credit is limited if your modified adjusted gross income is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the phase-out begins at $110,000. For married taxpayers filing a separate return, it begins at $55,000. For all other taxpayers, the phase-out begins at $75,000. In addition, the Child Tax Credit is generally limited by the amount of the income tax you owe as well as any alternative minimum tax you owe."

http://www.irs.gov/uac/Ten-Facts-about-the-Child-Tax-Credit

 

 

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orangemomma - congrats on paying off 2 debts and it looks like your EF is climbing in value a little at a time. Goodluck on the private high school.  Tuition can be very tough at places like that. I work at one currently and I know how much some of the parents sacrifice to have their children there. Can you son work to make up some of the cost? I know I valued my private education more because I worked to contribute to its payment.

 

AFM, DH and I would really like to refinance our house but I had gotten a home improvement loan that has the house as

collateral plus I did an 80/20 loan with 80% conventional mortgage, 20% HELOC. The new company won't let me refinance because there are 3 mortgages on the house and they are confused how I got a third since they said companies aren't supposed to do that.  Anyway, the third mortgage is $1807.44 and I want to focus on paying that off so we only have 2 mortgages and can hopefully refinance the house.

Thats good to have something to focus on. Once this is done, its worth asking about an assumable mortgage at the low rate. (I need to call in about this, as a motive to refinance). So if you sell your house, you can pass on the mortgage amount with the low rate to the new buyers.

 

AFM I haven't been able to increase my savings or ef recently...which is the stage I am at. I have money slotted towards maxing my 2012 IRA next pay. Then I can file my taxes. But this year my credit deductions decreased a lot, so I have to pay federal taxes but get a state return, cancelling each other out. At least I dont owe any more. I have had to change my withholdings for this year. (I used to pay for private health insurance which gave me a significant deduction in taxes, but my HI costs had decreased by over 50%, so I lost that "credit"). Also my contract ended in Dec. I just got word that there is a 6mth extension and then a  new contract will be up for bid in July. For now I know I have 6 more months of work/income. I have always been saving for this situation, but now I am encouraged to pad my EF to a full years worth of expenses.


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Old 03-15-2013, 06:16 AM - Thread Starter
 
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We met with the folks at my DS potential private high school yesterday. They have a 12 month payment plan with the first installment due on April 10th - we wouldn't be going into debt - but the monthly amount is quite steep and it's not something I am sure we can commit to for the next 4 years..

The school might have a job I am qualified for coming up in the next weeks -  I just have to wait for it to be posted on their website. In the meantime, I applied yesterday for a job nearby that I am perfectly qualified for - we shall see.

DS will have to work over summers to contribute to his tuition - it would be part of the plan to make this work. He's good with that.


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Old 03-15-2013, 10:05 AM
 
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Sounds good orangemomma!

Crafty Geeky lady (37, hypothyroid) married 7/2010 love of my life (42, azoospermia). I believe in MIRACLES! Twin boys born 12/21/13 at 40 weeks 2 days! 3/52 crafts in 2014 Ramsey's BS1: Done! 2/17/12 BS 2 goal: 6/7/17 no sperm initial DX 3/23/12 BFP 4/7/13!
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Old 03-15-2013, 08:49 PM
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Originally Posted by JNajla View Post

How is this possible?  I don't know much about how this works, if it is based on income, etc?
that's what I thought. I looked it up and it should still apply. She also didnt want to count any gas mileage. Said it wouldn't work. I'm doing mine online this time.

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Old 03-17-2013, 07:50 PM
 
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Sorry I have been MIA. I got the flu and just when I thought I couldn't get any more sick I threw my back out and haven't been able to move without screaming for two days. 

 

We're still waiting to hear back from the bank about the short sale. No new news.


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Old 03-18-2013, 04:48 AM
 
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Trekkingirl sorry to hear of your health wows.  My DH and I along with my little brother have all been sick - coughing aching annoying coughing!  Went to the doctor last week since some people at school at broncitis and pneumonia and I didn't want to let something go to far.   Doctor said it was some virus - go home take cough medicine and motrin, sleep, drink lots of water and wait.  That has been the mantra for the last 5 days. DH is taking another sick day, but I am going to work.


Crafty Geeky lady (37, hypothyroid) married 7/2010 love of my life (42, azoospermia). I believe in MIRACLES! Twin boys born 12/21/13 at 40 weeks 2 days! 3/52 crafts in 2014 Ramsey's BS1: Done! 2/17/12 BS 2 goal: 6/7/17 no sperm initial DX 3/23/12 BFP 4/7/13!
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